Cookies
We use cookies to give you the best possible experience on our website. You are free to manage this via your browser setting at any time or through the find out more link.

Cookies

Close
Find out more
Cookie Portal
Manage and find out more about the cookies used on this website.
View Cookie Settings
Read Cookie Policy

Accept All Cookies and Close
Close Without Saving
< Back
This website has 4 types of cookies:
Your preferences will not take affect until the "save and close" button is clicked. To view our cookie policy please click here.
Strictly Necessary Cookies Used to help you move around the site and use its features. Without these cookies, it will be very hard to use the website.
Analytical/Performance Cookies Used to anonymously track visitors around the website so that we can improve your experience.
Functional Cookies Allows the website to remember your preferences and personalised your experience.
Targeted Marketing Cookies Allows adverts you see to be targeted to you and your interests.
Save and Close
< Back
< Back
Cookie Policy
< Back
Media
Press releases

Ultra acquires leading RF and Microwave supplier

Ultra acquires leading RF and Microwave supplier to the international EW market

Ultra announces that it has today agreed to acquire the Electronic Products Division (“EPD”) of Kratos Defense & Security Solutions (NASDAQ: KTOS) for a cash consideration of up to $265m1.

Strategic rationale:

  • Establishes a major presence in the growing market of electronic warfare (EW)
  • Provides market and customer synergies with Ultra’s C2ISR2 market segment
  • Well established supplier to the attractive US EW market, which is growing at over 3% per annum
  • Long-term contracts strengthen Ultra’s order book visibility
  • The combined technologies under Ultra’s ownership will provide opportunity to gain market share

EPD (formerly Herley Industries Inc.) is a leading designer and producer of RF and microwave integrated systems and subsystems for use in EW, radar, communication, missile, flight test and simulation applications. The company, headquartered in Massachusetts, US, employs 433 people across four offices in the US and UK.

EPD is a sole-source provider of proprietary technology on numerous established strategic platforms, including P-8A Poseidon, Trident II D5 missile, F-16 Fighting Falcon, Eurofighter, AMRAAM missile, and EA-18G Growler. Given its continuing investments, key capabilities, customer relationships and strong historical programme performance, EPD is also well-positioned for opportunities on the F-35 Joint Strike Fighter and on multiple, next-generation strategic national defence and security programmes.

EPD has a proven track record of more than 20 years of successful participation on major defence programmes and long-standing relationships with a diverse international customer base. Major customers include Northrop Grumman, Lockheed Martin, Boeing, Raytheon, and Harris as well as the governments of the US, Australia, Germany and South Korea.

The Group has identified electronic warfare as a targeted growth area within its core markets in which Ultra is under-represented. EPD has a well-established position in the US EW market which is projected to grow at over 3% CAGR. The acquisition of EPD will augment the Group’s existing specialist EW capabilities in Australia and Canada and give access to new customers and markets. Equally, access to Ultra’s secure networks and military datalink capabilities will allow the EPD business to increase the scope of future offerings into their existing customer base.

EPD will be integrated into Ultra’s Tactical & Sonar Division. EPD will be renamed Ultra Electronics Herley Industries and its current head, Richard Poirier, will remain as President.

In the year ended 31 December 2014, EPD generated EBITDA of $22m, Profit Before Tax of $11m and reported gross assets of $217m. The acquisition will be earnings accretive from the first full year. The purchase price represents an implied transaction multiple of approximately 10.7x LTM EBITDA, after allowing for a tax benefit associated with the transaction resulting from a Section 338(h)(10) election. This benefit has a net present value of approximately $43m. The combined businesses of EPD and Ultra’s C2ISR segment are expected to achieve recurring pre-tax cost synergies of approximately $8m per annum, to be delivered in full by the end of 2019 as the culmination of some programmes allow the elimination of duplicate overheads. These synergies, together with the Section 338(h)(10) tax benefit, would take the implied transaction multiple to approximately 8x LTM EBITDA.

The acquisition of EPD will be financed using Ultra’s existing facilities and a new 4 year Term Loan provided by four banks from Ultra’s existing core banking group. Key terms and covenants match those of the existing facilities. Net debt/EBITDA following the transaction will be within Ultra’s guided range and is expected to be comfortably below 2x by the end of 2016, the first full year of ownership of EPD.The transaction is subject inter alia to US regulatory approvals. Assuming satisfaction of all closing conditions and approvals, the transaction is expected to close in the third quarter of 2015. Under the terms of the acquisition, Ultra will pay $260m in cash at closing, and up to another $5m in cash expected to be paid over the next 12 months.

Rakesh Sharma, Chief Executive of Ultra, commented:

“I am pleased to announce the acquisition of EPD, and to welcome the business and its people into the Ultra Group. EPD adds significant core technologies in the RF and microwave sectors and complements the Group’s communications and sensor portfolio. EPD has a strong position on supported legacy programmes as well as future strategic ones. Together, we have the technology, innovation and market reach which will enable us to enhance our market position in the attractive EW market, both within the US and internationally.”

Enquiries:

Ultra Electronics Holdings PLC
www.ultra-electronics.com +44 20 8813 4300
Rakesh Sharma, Chief Executive
Mary Waldner, Group Finance Director
Susan Ellis, Corporate Affairs Director +44 7836 522 722

Moelis & Company (financial adviser) +44 20 7634 3500
Ed Eppler
Liam Beere

J.P. Morgan Cazenove (financial adviser and broker) +44 20 7777 2000
Robert Constant
Richard Perelman

MHP Communications
James White +44 20 3128 8756

1 Ultra is acquiring Kratos’ Electronic Product Division (EPD). EPD has separate Israeli businesses named Kratos-General Microwave Israel and Kratos GMI-Eyal, which are not part of this acquisition.2 C2ISR - Command, Control, Intelligence, Surveillance & Reconnaissance

For the full press release on this subject download PDF
Back to top of page

X

Please read this notice carefully – it applies to all persons who view this webpage.


ELECTRONIC VERSIONS OF THE MATERIALS YOU ARE SEEKING TO ACCESS ARE BEING MADE AVAILABLE ON THIS WEBPAGE BY ULTRA ELECTRONICS HOLDINGS PLC (THE “COMPANY”) AND FOR INFORMATION PURPOSES ONLY.

THE MATERIALS CONTAINED ON THIS WEBPAGE ARE RESTRICTED AND ARE NOT DIRECTED AT OR TO BE ACCESSED BY, OR DISTRIBUTED OR DISSEMINATED TO, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, PERSONS RESIDENT OR PHYSICALLY LOCATED IN THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA) (THE “UNITED STATES”), AUSTRALIA, NEW ZEALAND, CANADA, THE REPUBLIC OF SOUTH AFRICA, HONG KONG, SINGAPORE OR JAPAN OR ANY OTHER JURISDICTION WHERE THE RELEVANT ACTION WOULD BE UNLAWFUL (“RESTRICTED JURISDICTION”).

Basis of access

The materials contained on this webpage contain information in respect of the proposed placing of the Company (the “Placing”). The materials do not constitute an offer to sell or otherwise dispose of, or a solicitation of any offer to purchase or subscribe for, any securities of the Company (the “Securities”) in any jurisdiction where such offer or solicitation is unlawful.

Please note that this notice may be altered or updated from time to time. You should read it carefully in full each time you access this webpage.

The information contained on this webpage speaks only at the specified date of the relevant document or announcement reproduced on this webpage, and neither the Company nor any of its affiliated companies has, or accepts, any responsibility or duty to update or revise any such information, document or announcement (other than to the extent such duty arises as a matter of law or regulation) and reserves the right to add to, remove or amend any information reproduced on this webpage at any time in whole or in part at its sole discretion.

Overseas persons

Viewing this information may be unlawful if you are resided or located in a Restricted Jurisdiction. In certain jurisdictions, including Restricted Jurisdictions, only certain categories of persons may be allowed to view such materials. All persons resident or physically located outside the United Kingdom who wish to view these materials must first satisfy themselves that they are not subject to any local requirements that prohibit or restrict them from doing so and should inform themselves of, and observe, any applicable legal or regulatory requirements applicable in their jurisdiction.

The Company has not registered, and will not register, the Securities under the United States Securities Act of 1933, as amended (the “US Securities Act”), or with any securities regulatory authority of any state or other jurisdiction of the United States. The Securities cannot be offered or sold, delivered or otherwise transferred in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with all applicable securities laws of any state or other jurisdiction of the United States. There will be no public offering of the Securities in the United States. The materials contained on this webpage do not constitute an offer to sell or otherwise dispose of, or a solicitation of any offer to purchase or subscribe for, any Securities in the United States or in any jurisdiction where such offer or solicitation would be unlawful.

It is your responsibility to satisfy yourself as to the full observance of any relevant laws and regulatory requirements.

If you are not permitted, or if you are in any doubt as to whether you are permitted, to view the information, please exit this webpage by clicking on the “Decline” button at the bottom of this page.

Any person seeking access to this webpage represents and warrants to the Company that they are doing so for information purposes only. Making press announcements and other documents available in electronic format does not constitute an offer to sell or the solicitation of an offer to buy Securities. Further, it does not constitute a recommendation by the Company or any other party to sell or buy Securities.

By choosing the “Accept” option, you represent that you have read and understood this notice and are able to give the confirmation and representations set out under the “Confirmation of understanding and acceptance of disclaimer” heading below, including the representation that you are not resident or physically located in a Restricted Jurisdiction, and that the Company is lawfully entitled to make the content of any communication or document in relation to the Placing available to you under applicable securities laws. If you are not permitted to view the information on this webpage, or viewing the information would result in a breach of the above, or if you are unable to give any of the confirmations or representations, please exit this webpage and do not view the content of any communication or document in relation to the Placing.

Copies of the contents of the following pages (including documents posted thereon) must not be, directly or indirectly, released, mailed, transmitted or otherwise forwarded, distributed or sent, in whole or in part, in or into a Restricted Jurisdiction, and persons receiving such documents (including, without limitation, custodians, nominees and trustees) should observe these restrictions and must not, directly or indirectly, mail, transmit or otherwise forward, distribute or send any such documents in, into or from any such jurisdiction. The Company and its advisers do not assume any responsibility for any violation by any person of any of these restrictions.

This notice shall be governed by, and interpreted in accordance with, English law.

Confirmation of understanding and acceptance of disclaimer

  1. I certify that I have read and understand and agree to comply with all of the restrictions set forth above.
  2. I certify that I am resident and physically present outside a Restricted Jurisdiction, and I am not acting on behalf of someone who is resident or physically present in any Restricted Jurisdiction.
  3. I agree that I will not forward, transfer or distribute (by any means including by electronic transmission) any information contained in this webpage (either in whole or in part) to any person in any Restricted Jurisdiction.
  4. represent and warrant to the Company that I intend to access the webpage for information purposes only, that I have read and understood this notice and that I understand it may affect my rights or responsibilities.
  5. I agree to be bound by the terms of this notice.

Acceptance of disclaimer

By clicking on the “Accept” option at the bottom of this page, you hereby acknowledge that you have read and understood the notice set out above, that you are able to give the confirmation and representations set out under the “Confirmation of understanding and acceptance of disclaimer” heading above, that you are permitted to proceed to the webpage and agree to be bound by its terms.

By clicking on the “Decline” button at the bottom of this page, you will not be able to proceed to the webpage.


Decline Accept